Skip to content

Deepest Bond Yield Inversion Since Volcker Suggests Hard Landing

  • US 2-year yield exceeds 10-year by a full percentage point
  • Upside-down bond market anticipates Fed policy doing damage
Bloomberg business news
Ken Griffin on Inflation, Fed, Recession, Debt and More
Updated on

The bond market is doubling down on the prospect of a US recession after Federal Reserve Chair Jerome Powell warned of a return to bigger interest-rate hikes to cool inflation and the economy. 

As swaps traders priced in around a full percentage point of Fed hikes over the next four meetings, the yield on two-year Treasury notes touched 5.08% on Wednesday, its highest level since 2007. Critically, longer-dated yields remained in check, with the 10-year rate under 4% and the yield on 30-year bonds lower.